1.Cooperatives covered by the system

The cooperatives covered by this system are as follows. As soon as one of these cooperatives accepts savings and others covered by insurance, an insurance relationship is automatically established between the Corporation, the cooperative and its depositors.

Agricultural cooperatives (only if engaged in credit business)
Credit federations of agricultural cooperatives
Fishery cooperatives (only if engaged in credit business)
Credit federations of fishery cooperatives
Fishery processing cooperatives (only if engaged in credit business)
Credit federations of fishery processing cooperatives (only if engaged in credit business)

The Norinchukin Bank

(Note) Banks provided under the Banking Act, long-term credit banks provided under the Long-Term Credit Bank Act, shinkin banks, credit cooperatives, labor banks, the Shinkin Central Bank, the Shinkumi Federation Bank, the Rokinren Bank, and the Shoko Chukin Bank are covered by the “deposit insurance system”. Securities companies are covered by the “Japan Investor Protection Fund”, and life and non-life insurance by the “Insurance Policyholders Protection Corporation”.

2.Savings and others covered by insurance

The scope of savings and others covered by savings insurance is as follows.
Savings
Installment savings
Cash trusts with contracts for replacement of losses (including loan trusts)
Agriculture and forestry bonds (only when exclusively for protective custody)
Savings and others related to the investment of defined contribution pension reserves

However, the following are not covered.
Foreign currency savings
Negotiable certificates of deposit
Savings included in Special International Financial Transactions Accounts (“offshore” savings)
Deposits from the Bank of Japan (except treasury funds)
Deposits from insured cooperatives and other financial institutions (except savings and others related to the investment of defined contribution pension reserves)
Deposits from the Corporation
Unnamed savings
Savings under another person’s name (including fictitious names)
Introductory savings
Cash trusts with no contract for replacement of losses
Agriculture and forestry bonds (unless exclusively for protective custody)

3.The scope of protection under the savings insurance system

(1)Protection of savings, etc.

The amended Savings Insurance Act of December 2002 specifies the amount of insured savings payable when a cooperative fails from April 2005 onwards. Of savings and others covered by insurance, those coming under savings for payment and settlement (i.e. savings that satisfy the three conditions that they are (1) interest-free and (2) payable on demand, and that (3) a payment service can be provided) are protected in full (a permanent measure). For savings other than these, principal up to 10 million yen, plus interest and other accruals, is protected per depositor per cooperative.

For savings and others covered by insurance not coming under savings for payment and settlement and with principal exceeding 10 million yen, and for savings and others not covered by insurance, plus interest and other accruals, payments are made in accordance with the asset situation of the failed cooperative. As such, these are sometimes partially reduced.

Savings, etc., covered by savings insurance	Savings for payment and settlement purposes (Note 1)	Current savings Non-interest bearing ordinary savings, etc.	Full protection
	General savings	Interest bearing ordinary savings, time savings, savings deposits, call deposits, installment savings, Norinchukin Bank debentures (Ritsuno Wide and other custody products) etc.	Protection for combined principal up to 10 million yen, plus interest, etc. (Note 2) Portion exceeding 10 million yen paid in accordance with the asset situation of the failed cooperative (subject to deductions)
Savings, etc., not covered by savings insurance	Foreign currency savings, negotiable certificates of deposit, Norinchukin Bank debentures (other than custody products, e.g. Warino and Ritsuno) etc.		Not subject to protection Paid in accordance with the asset situation of the failed cooperative (subject to deductions)

(Note 1) Refers to savings that satisfy three conditions, namely that they are (1) interest-free and (2) payable on demand, and that (3) a payment service can be provided.

(Note 2) The benefit compensation for installment savings is protected in the same way as interest.

(2) Protection of settlement debt
In the December 2002 amendment to the Savings Insurance Act, the full amount of settlement debt was to be protected from April 2003 onwards.

Settlement debt is debt borne by a cooperative in connection with transactions related to capital settlements made by the cooperative (foreign exchange transactions, transactions based on the presentation of bills, checks and others that can be settled in clearing houses, and transactions related to checks drawn by the cooperative in its own name). This would involve, for example, debts arising from transactions in which, although the cooperative has received a request for transfer from a customer before bankruptcy, the funds received from the customer have not yet been moved to the transfer destination.

(Note) In principle, debts arising from transactions outsourced by the cooperative itself or by entities engaged in financial business (*see below) do not fall under settlement debt. However, cases such as debts not related to transactions undertaken by the cooperative as business do fall under settlement debt.

Settlement debt not accounted as savings for payment or settlement is called “specific settlement debt”. For example, this would entail settlement debt accounted as the cooperative’s savings, temporary receipts, etc.

4.Insurance premiums

(1) Payment of insurance premiums
Cooperatives covered by savings insurance are obliged to pay insurance premiums to the Corporation by June 30th every year. Insurance premiums form the base fund for the Corporation’s operations in providing financial assistance and insurance payouts.

The Corporation outsources the administrative work of accepting insurance premiums to credit federations of agricultural cooperatives, credit federations of fishery cooperatives, and the Norinchukin Bank.

(2)Insurance premium amounts
Insurance premiums are calculated by multiplying the previous fiscal year’s balance of savings and others covered by savings insurance (from FY2002 onwards, this has changed from the balance on the final day of the previous fiscal year to the average balance on working days in the previous fiscal year) by the insurance premium rate.

(3) Deciding the insurance premium rate
The insurance premium rate is decided with the approval of the competent ministers (i.e. the Minister of Agriculture, Forestry and Fisheries, the Minister of Finance and the Commissioner of the Financial Services Agency (legally mandated by the Prime Minister)) following a resolution by the Policy Board, and is then publicly announced.

○ Trends in the insurance premium rate

	Insurance premiums
	Ordinary insurance premiums		Special insurance premiums (Note 1)
FY1973 (system launch) –	0.006%		－
FY1986	0.010%		－
FY1987	0.011%		－
FY1988-	0.012%		－
FY1996-	0.018%		0.012%
FY2001	Designated savings (Note 2)	Other savings, etc.	0.012%
	0.018%	0.018%
FY2002	0.034%	0.017%	－
FY2003	Savings for payment & settlement	General savings, etc.	－
	0.034%	0.017%
FY2004-	0.017%	0.014%	－
FY2010- present	0.018%	0.014%	－

(Note 1) Only available between FY1996 and FY2001 (Savings Insurance Act, Supplementary Provisions Article 10 paragraph 1).
(Note 2) I.e. current savings, ordinary savings and separate savings.

(4)Trends affecting the insurance premium rate in recent years
There were two types of insurance premium (ordinary insurance premiums and special insurance premiums) between FY1996 and FY2001, but special insurance premiums were abolished at the end of FY2001.

(Note 1) Special insurance premiums formed the base fund for an account especially created with the aim, among others, of providing financial assistance (special financial assistance) exceeding the pay-off cost (the cost expected to be borne by the Corporation when insurance payouts are made to depositors; the same applies below), in response to special measures for full protection of savings, etc. (FY1996-FY2001). Cooperatives covered by savings insurance were obliged to pay special insurance premiums (the premium rate was set by Cabinet Order at 0.012% of the balance of insured savings).

As the insurance premium rate for FY2002, while full protection continued for “designated savings”, a different system applied to “other savings, etc.” as part of the shift to fixed sum protection (protection for principal up to 10 million yen plus interest thereon, etc.). Considering the gist of the Savings Insurance Act and a report by the Financial System Council in December 1999, the rate was set at 0.034% for “designated savings” and 0.017% for “other savings, etc.”.

(Note 2) Therefore, total income from insurance premiums comprised the balance of “designated savings” multiplied by 0.034%, plus the balance of “other savings, etc.” multiplied by 0.017%.

In FY2003, insurance premium rates were to be set anew under the provisions of the December 2002 amendment to the Savings Insurance Act. However, in FY2003 and FY2004, “designated savings” (which had been covered by full protection up to FY2002) were regarded as “savings for payment and settlement” and continued to be fully protected, while “other savings, etc.” were renamed “general savings, etc.” and subject to fixed sum protection. As a result, the framework of savings protection remained essentially the same as in FY2002.

Therefore, different premium rates were set for “savings for payment and settlement” and “general savings, etc.” Partly out of consideration for continuity and taking into account the gist of the Savings Insurance Act, etc., the rate for “savings for payment and settlement” was set at 0.034% and that for “general savings, etc.” at 0.017%.

The insurance premium rates were again changed in FY2004, taking into account the situation of cooperative failures until then and the state of the Corporation’s finances, etc. Now, the rate for “savings for payment and settlement” was set at 0.017% and that for “general savings, etc.” at 0.014%, these two being pegged until FY2009.

Since FY2010, the rate for “savings for payment and settlement” has been 0.018% while the rate for “general savings, etc.” has remained unchanged at 0.014%. Though maintaining the previous rationale on setting insurance premium rates, this was based on changes in the compositional proportions of savings, in that the ratio of “savings for payment and settlement” was decreasing and that of “general savings, etc.” was increasing.